The Value of Innovation Work
The Value of Innovation Work
Measuring Return On Innovation
Other ways to engage: watch the webinar, listen on Spotify
Thursday, September 24, 2020
Thank you to our panelist Mark Kaiser, an Independent Corporate Venturing Consultant (CVC), our facilitators Tiffany Murray of Verizon’s 5G Innovation Labs and Meaghan Kennedy, the founder of Orange Sparkle Ball, for joining us for an Evolve Innovation Network conversation around measuring return on innovation. In this conversation, Mark discusses his experience transforming the CVC initiatives of Fortune 500 companies and how to show return on future technologies or pilots that may not be ready for scaled launch. Replay the webinar now, listen to the podcast, or see below for selected highlights from this conversation.
Common Pitfalls When Measuring Innovation
All too often, corporate decision makers have only the bottom line in mind. In the world of innovation, starting with budget considerations is starting in the wrong place, or as Mark Kaiser says, “starting at the bottom instead of the top.” Innovation projects must be approached with the mindset of asking, “What are we trying to accomplish?” With this question in mind, success and failure are measured differently, with the focus on outcome rather than income. This is a challenge for every company, but particularly in the corporate world where you must change the view of an executive from budget to return on invested capital. Only then can innovation’s true value and potential become clear.
3 Types of Innovation
There are 3 types of innovation ranging from the least disruptive to the most disruptive. One example of innovation occurs when a company adapts an existing product or service to a new customer need or desire, otherwise known as a product extension. On the other end, a company may choose to create an entirely new business, like Uber or Airbnb, completely disrupting the market. In the middle, a company may choose to create a new product in an existing sector.
Many times, innovation is spurred by disruption in the marketplace, requiring companies to respond to competitors, respond to new technology, or defend their core business. Mark gives the example of a product line he worked on for Goody where they were at risk of losing line reviews to Conair at Walmart. This was due to the fact that Conair had heat styling tools included in their product line while Goody had only hair accessories. Mark helped to design a new line of styling tools for Goody to compete in the line reviews and defend their core business. In this example, the strategic decision to create a new line of heat styling tools was not about the incremental revenue generated by the new styling tools but rather strategic innovation to prevent the loss of a massive line contract.
Occasionally, companies choose to fund innovation projects because they impact how financial markets view the company. Financial markets typically look favorably on innovation work, and it attracts investors who expect higher returns linked to the potential of a new product or service to generate higher earnings for the company and a rise in stock value. However, financial markets have a short memory, and it’s vital for innovation work to generate a quick win, even a small one, to show investors that their faith is not misplaced.
Focusing on the “Why?”
Ultimately, there is often too much focus on the “what?” and “how?” and not enough focus on the “why?” of a project. What is the problem you’re trying to solve? Mark suggests that focusing on the problem rather than immediately jumping to a solution-oriented mindset can bear more fruitful results and reframe the way of thinking about a problem. This approach also reframes the way successes and failures are viewed and how both are equally important and valuable. It reveals unexpected learnings and knowing what failure looks like can help you to better define your metrics for success. Representing failure to leadership can also be difficult, but with the “Why?” mindset, detailing the challenges faced and how your team will iterate and improve for the next version can only serve to fortify your process and strengthen your design.
Writing by Hannah Ranieri, Design Strategist at Orange Sparkle Ball, Inc.